Pathway Quebec Mining 2008-II Inc.

Pathway Quebec Mining 2008-II Flow-Through Limited Partnership

Pathway Multi Series Fund Inc.

May 06, 2009 14:41 ET

Rollover of Assets Completed-Over Par Again, Despite Adverse Market Conditions

TORONTO, ONTARIO--(Marketwire - May 6, 2009) - Pathway Quebec Mining 2008-II Inc., general partner of Pathway Quebec Mining 2008-II Flow-Through Limited Partnership (the "Partnership"), and Pathway Multi Series Fund Inc. (the "Mutual Fund Corporation") announce that the Partnership has completed the transfer and sale (the "Rollover Transaction") of all its assets (excluding cash) on a tax-deferred basis to the Mutual Fund Corporation in exchange for shares of the Mutual Fund Corporation of the class designated as Mutual Fund Shares, Explorer Series, A/Rollover Series ("Mining Class Shares") effective May 4, 2009. The rollover was accomplished an amazing 19 months ahead of schedule, at a value of $12.25 per $10.00 unit, representing a 22.5 % absolute return, and an after-tax return of 244.59 % before capital gains, and 161.51% with capital gains taken into account. Most investors in this Partnership had their money tied up for only 6 months. This is the third year in a row in which Pathway has rolled over a prospectus offering ahead of schedule, which is unprecedented in the flow-through limited partnership industry.

Pathway President Joe C. Dwek, C.A. had this to say: "Pathway is filled with pride over our ability to deliver to our Quebec and Ontario investors from late 2008 a significantly greater than 100 cents on the dollar return in these very challenging times for junior resource stocks, particularly since the current values of our competitors' flow-through limited partnerships from the same period are depressed. It is a testament to the fact that our unique five layer due diligence team is delivering outperformance results. And it is no wonder that investors have rewarded us with 9 sold out prospectuses since 2006. We are delighted that we can offer Pathway investors some hope during the worst markets since the great depression. And investors who are investing with us now in 2009 can expect the same kind of phenomenal values in mining investments our unique due diligence team continues to uncover"

Pathway Group's first offering - Pathway Mining 2005 Flow-Through Limited Partnership - which closed in late 2005, was dissolved 20 months ahead of schedule, on May 8, 2006, and rolled over into an RRSP-eligible mutual fund corporation (Pathway Multi Series Fund Inc.) to provide investors with early liquidity on a tax-deferred basis. At early dissolution, each $10 unit was worth $19.90, representing a pre-tax return of 99 %, and an after-tax return of 325.98 % before factoring in capital gains tax, and 227.13% when capital gains tax is factored in (the after-tax returns are calculated in accordance with certain assumptions disclosed in the prospectus). Pathway Group's second offering - Pathway Mining 2006 Flow-Through Limited Partnership - was also dissolved and rolled over 16 months ahead of schedule @ $11.19 per $10.00 unit, with an after-tax return of 140.99 % before factoring in capital gains tax, and 85.00 % when capital gains tax is factored in (the after-tax returns are calculated in accordance with certain assumptions disclosed in the prospectus). Pathway Group's third offering - Pathway Mining 2006-II Flow-Through Limited Partnership - was also dissolved and rolled over 7 1/2 months ahead of schedule @ $10.09 per $10.00 unit, with an after-tax return of 116.61 % before factoring in capital gains tax, and 66.35 % when capital gains tax is factored in (the after-tax returns are calculated in accordance with certain assumptions disclosed in the prospectus). In other words, Pathway Asset Management has dissolved and rolled over each of its first 3 prospectus offerings way ahead of schedule, and above par, and now our Pathway Quebec Mining 2008-II LP joins this stellar group.

An investment in limited partnership units ("Units") of the Partnership were exchanged on a tax-deferred basis for Mining Class Shares with equal value pursuant to an asset purchase agreement dated May 4, 2009 between the Partnership and the Mutual Fund Corporation. The Limited Partners received 2.3428 Mining Class Shares of the Mutual Fund Corporation for each Unit held, based on a net asset value per Unit of $12.25 and a net asset value per share of $5.23 for each Mining Class Share.

The Partnership had net assets of $13,047,800 at the time of the transfer. The Partnership's original subscription price in late 2008 was $10.00 per Unit resulting in the after tax return to investors (based on the highest marginal tax rate in Quebec) being 244.59 % before factoring in capital gains tax, or 161.51 % when capital gains tax is factored in for those investors who do not have past capital losses, but an absolute return of 22.5 %. In other words, in addition to receiving tax breaks of approximately 60 cents on the dollar, each $10 unit was rolled into the Mutual Fund Corporation at $12.25. The capital gains tax liability that would arise upon disposition can be deferred by retaining the shares of the Mutual Fund Corporation.

Pathway now has 3 new prospectus offerings (a) Pathway Mining 2009 Flow-Through Limited Partnership - available for Canadian residents outside Quebec; (b) Pathway Quebec Mining 2009 Flow-Through Limited Partnership - available for Quebec residents; and (c) Pathway Oil & Gas 2009 Flow-Through Limited Partnership - available for residents throughout Canada.

Pathway Asset Management and its affiliates have raised $568,013,820 in their flow-through limited partnerships to date since their inception.

Information on the Partnership or mutual fund can be obtained by visiting the website www.pathwayam.com or by contacting the General Partner by e-mail at jd@mineralfields.com, by telephone at (416) 665-9339 ext 221, toll-free at 1 (800) 339-9169 ext 221, or by facsimile at (416) 665-9331.

Contact Information

  • Pathway Asset Management
    Imtiaz Hashmani
    CFO
    (416) 665-9339 Ext. 229 or Toll Free 1-800-339-9169 Ext. 229
    (416) 665-4772 (FAX)
    Website: www.pathwayam.com